Student loan program gets much-needed boost
Thursday, July 3, 2008 12:41 AM PDT
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Paying for higher education became a little easier for low-income students this week. Changes in the federal student loan program that took effect Tuesday will enable eligible students to borrow more money for college expenses at slightly lower interest rates.
According to Associated Press education writer Justin Pope, the interest rate on subsidized Stafford loans to undergraduates drops form 6.8 percent to 6 percent, and the maximum amount students can borrow increases by $2,000 per year. Also, the maximum for Pell Grants, the federal direct aid program for low-income students, rises to about $4,730 per year.
This is good news for college-bound students here and around the country who rely on government-subsidized loans and other financial aid. The cost of a higher education continues to increase faster than the rate of inflation. On average, tuition and fees at public four-year universities rose 6.6 percent this year.
Tuition at Washington’s public four-year universities has risen 70 percent since 2000. According to the National Center for Public Policy and Higher Education's latest biennial study on college affordability, sending a student to one of Washington’s public universities took about 20 percent of a typical family’s income in 2002. As of 2006, that family was having to spend 31 percent of its income on the student’s education.
This latest move to boost student financial aid comes just a year after the federal government made what some called the biggest investment in student financial aid since the GI Bill. In 2007, Congress cut nearly $20 billion in federal subsidies to banks that handle government-backed student loans and applied the bulk of that money toward increasing financial aid to students from low- and middle-income families.
The increased effort in recent years to making college more affordable — both at the federal and state levels — is appropriate. Higher education is fast becoming a requirement for living wage jobs. Jobs in resource-based industries, which once provided young people in this area the prospect of a secure, well-paying job right out of high school, have been on the decline for more than two decades now. Our community is still in a period of transition, moving toward the creation of a more diverse economy.
Both the individual students and this community stand to benefit from making higher education more affordable. More students are able to better prepare themselves to compete in emerging global economy. A larger pool of college-educated workers attracts more employers to the community offering higher paying jobs.
Student financial aid is an investment in human capital. It’s a sound investment that can be expected to pay long-term dividends.
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